Santa Rosa workers comp lawyers know that workers compensation fraud doesn’t happen often, but agree that it should never happen
Workers compensation insurance companies want people to believe that fraudulent workers comp claims are rampant. Fraud does happen, and nobody should ever participate in a fraudulent claim. But insurance companies can be too quick to label legitimate claims as fraudulent. Santa Rosa workers’ compensation attorneys do not help clients pursue fraudulent claims, but we do help injured workers overcome insurance company bias and suspicions that legitimate claims are fraudulent.
Workers Compensation Fraud
Workers compensation fraud occurs when an employee makes a false statement of fact in connection with a claim for payment of workers’ compensation benefits. Examples of workers’ comp fraud include:
- Faking an injury
- Claiming that an injury occurred at work when it actually occurred elsewhere
- Claiming that an injury causes pain or disability after it has fully healed
- Claiming an inability to work while working for a different employer at the same time
- Colluding with a healthcare provider to falsify medical records
When workers compensation in-surance fraud is committed by employees, the insurance industry makes sure the public hears about it. The public is less aware that employers sometimes defraud employees by taking steps that deny an employee the workers’ comp benefits they are entitled to. Misclassifying an employee as an independent contractor is one of the ways that companies have cheated employees out of their workers’ compensation benefits.
Employers also commit fraud against their insurance companies by understating their payroll or submitting claims through shell companies that appear to have only a few employees and therefore allow them to pay lower insurance premiums. The kind of workers compensation fraud that makes headlines, however, is fraud allegedly committed by injured workers.
Workers Comp Fraud Myth and Reality
The workers compensation insurance industry has an interest in making the public (and legislators) believe that fraudulent claims are a serious problem. They lobby for legislative “reforms” that often help them avoid paying the full value of legitimate claims.
According to a Frontline report on PBS, studies show that only 1 to 2 percent of all workers compensation claims are fraudulent. Yet the insurance industry launched a nationwide campaign to provoke outrage over alleged abuse of the system based on a small and manageable problem. The campaign has been profitable for the insurance industry, but it has done very little to reduce fraudulent claims.
For example, the California legislature placed a cap on the number of chiropractic and physical therapy treatments that injured workers may receive. This was partly due to the belief that some chiropractors and therapists encouraged unnecessary visits. However, the reality is that injured workers don’t waste their time pursuing medical care that isn’t effective. It takes time to rehabilitate spine and muscle injuries, and patients have no incentive to return to a chiropractor or physical therapist unless the treatment is beneficial. Putting an arbitrary limit on treatment effectively places an arbitrary limit on the amount of healing an injured worker can achieve.
Employers are eager to believe the insurance industry’s exaggerated assertions about workers compensation fraud because they want to reduce their insurance premium payments. They hope that “reforming” the system will result in reduced insurance premiums. In the real world, “reforms” increase the profits earned by insurance companies, but those profits often are not passed along to employers in the form of lower premiums.
Companies that want to reduce workers compensation insurance costs should focus on injury prevention. The fewer employees who are injured on the job, the less a company is likely to pay for workers’ compensation coverage. Fraud is a much smaller concern than the failure to adopt and enforce safety standards that prevent injuries from occurring in the first place.
Penalties for Workers’ Compensation Fraud
Workers’ compensation insurance fraud should never happen, but not everyone is honest. During 2015-16, the Workers’ Compensation Fraud Division investigated more than 5,000 reports of fraud, but referred only 167 cases for prosecution. Those statistics suggest that fraud is suspected far more often than it actually occurs.
Still, workers’ compensation fraud does exist. When California employees defraud a workers compensation insurer, they can be prosecuted for a crime. The district attorney typically has the discretion to prosecute the offense as a felony or a misdemeanor. A felony conviction could carry a sentence of two, three, or five years, as well as a fine of double the amount of the fraud or $150,000, whichever is greater. The court can also order restitution, which is an order requiring the fraudulent party to repay the amount of fraudulently obtained benefits to the insurance company.
Insurance companies can also pursue civil suits against employees who receive benefits after making a fraudulent claim. In addition to winning a judgment for the amount of benefits received, civil penalties can add thousands of dollars to the amount that the employee could owe the defrauded insurance company.
Get Help When Claims Are Denied
The risks of participating in insurance fraud greatly outweigh the benefits an employee might receive. Penalties are designed to discourage fraud and insurance companies are aggressive about pursuing them.
When legitimate claims are denied because fraud is falsely suspected, injured workers can be cheated out of the benefits they deserve. Injured workers can fight back with the help of a Santa Rosa workers compensation attorney. To protect your rights if your claim has been denied, call Kneisler & Schondel at (707) 542-5132 or submit our online contact form.